Why Most Real Estate Agents Don’t Back Up What They Say

Some agents are not will­ing to back up their word

I recently came across some people online com­plain­ing about real estate agents, telling sellers that they can get them a price for the prop­erty above their expect­a­tions, but not will­ing to back it up in their com­mis­sion structure.

Hon­est agents don’t par­ti­cip­ate in overpricing

Here is a story I found online of a seller try­ing to lock an agent into a con­tract; 

The seller inter­viewed sev­eral real estate agents, and most agents estim­ated the prop­erty would sell for $500,000-$550,000.

The real estate agents con­tin­ued to say “where it would sell for in that range we do not know” which is fair enough to say because it can very much depend on the buyer com­pet­i­tion, the mar­ket and what price buy­ers see value at.

One par­tic­u­lar real estate agent claimed that they would be able to sell the prop­erty for “over $550,000”, far more than the other agents had estim­ated.  

Of course the owner would love to achieve this higher fig­ure sug­ges­ted by the other agent, how­ever he was scep­tical that the agent may not be able to achieve the res­ult prom­ised.

The owner pro­posed a com­mis­sion scheme to the agent that effect­ively would put his money where his mouth is, offer­ing the agent a fixed fee of $5000  plus an addi­tional 20% for every dol­lar achieved above $550,000 .

This way, the agent stood to earn a far more gen­er­ous fee if he sold the prop­erty for the price he claimed was achiev­able.

The funny thing is the real estate agent would not sign the agree­ment claim­ing, “What if it sold it for $500,000? We would still do the same amount of work and not be paid for it”.

Obvi­ously this agent didn’t believe in his abil­it­ies enough to put it in writ­ing and deep down knew what the mar­ket would pay.

Agents over­valu­ing prop­erty to win business

This screams to me “UNETHICAL/DISHONEST REAL ESTATE AGENT”. 

It is com­mon prac­tice for uneth­ical or dis­hon­est real estate agents to over quote home sellers to get them to com­mit to their agree­ment.

It is a clas­sic example of over prom­ising and under deliv­er­ing.

This tech­nique is called “buy­ing the list­ing”, and it taps into the seller’s greed.

These types of agents often won’t com­mit on a selling price of the prop­erty, because more often than not they are unable to deliver on that price, spend­ing major­ity of the time on blam­ing the mar­ket and the home when they can­not achieve their ori­ginal out­rageous claims.

The char­ac­ter­ist­ics of an hon­est agent that is will­ing to back up their word 

• Tells you like it is, not to offend you but to be honest
• Con­stantly in com­mu­nic­a­tion and not avoid­ing your phone calls
• Works in your best interest at all times
• Isn’t afraid of telling you the price the prop­erty should be mar­keted for, using local area exper­i­ence and recent sales to equate the poten­tial price
• They fol­low your instruc­tions, but lets you know of any implic­a­tions that may adversely affect the mar­ket­ing process
• They don’t break the law (this is an obvi­ous one but some sellers may not be aware of the laws)
• They will not do secret com­mis­sions or cash jobs
• They can show evid­ence of their claims
• Most import­antly of all they are will­ing to back their prom­ises in writ­ing.  For example a com­mis­sion struc­ture that incentiv­ise them to get the price for your prop­erty they promised.

The key to selling your prop­erty the best pos­sible price

The num­ber one key when selling your prop­erty, is to know the real­istic price of your prop­erty.

Now I under­stand selling a prop­erty can be very emo­tional and your home can be of great value to you, but when selling to the open mar­ket, buy­ers will not buy for your emo­tional reasons.

Here is how to find out if your price is realistic;

• Take emo­tion out of it
• Go to other open homes that are sim­ilar to your property
• Ring the coun­cil to find out if there is any devel­op­ment oppor­tun­it­ies for your block
• Pay for an RP data report on what sim­ilar prop­er­ties to yours sold for
• Call a couple of the largest local agents and ask for a list of sold prop­er­ties every month

Sum­mary

If you are real­istic on price and take emo­tion out of selling your prop­erty you are halfway there to get­ting a great selling price for your prop­erty, but if you find an
hon­est exper­i­enced agent with good solid mar­ket­ing, there is no telling how much more your prop­erty can sell for.

I have seen in our office prop­er­ties go for over $100,000 the reserve price on more than one occa­sion.

This is unbe­liev­able to watch.

That is, when you have such a good com­bin­a­tion between the 6 P’s of prop­erty marketing;

• Present­a­tion
• Pos­i­tion
• Price
• Prop­erty
• Pro­mo­tion
• People